4:36 PM, December 4, 2012

No site has been named for the new arena and entertainment district, but three possible sites have been mentioned, including the area directly behind the Ilitch-owned Fox Theatre. / Romain Blanquart/Detroit Free Press

After years of hints and speculation, the Ilitch organization took the first steps today to build a new entertainment district downtown anchored by a multipurpose arena that would be home to the Ilitch-owned Red Wings.

No site has been chosen yet, but the proposed district would offer much more than hockey. The multipurpose arena would host a range of shows, concerts and other events, while the broader district would include residential housing, retail shopping, office space and more.

A spokeswoman for the Ilitch family’s Olympia Development said the proposal begins a process “to explore the viability” of such a district. But the Ilitch news release quoted George W. Jackson Jr., the city’s top development official and president and CEO of the Detroit Economic Growth Corp., as saying the plan “makes good business sense.”

“It’s not a plan for an isolated, single-use structure,” Jackson said in the statement. “Instead, it builds on the clear successes we’ve already had downtown integrating districts that feature entertainment, and support commercial, retail and residential development around them.”

The Ilitch organization pegged the probable price tag at $650 million. A “significant private investment” – presumably from the Ilitches – would help pay for it, but the project would also need public support in the form of tax dollars currently collected by the city’s quasi-public Downtown Development Authority.

Legislation introduced in Lansing would create a new “catalyst development project” that could benefit from support from the Michigan Strategic Fund and also from the use of Downtown Development Authority tax revenues that support projects in the central business district.

The proposed legislation defines “catalyst development project” as one that is designated by the local Downtown Development Authority, which results in at least $300 million in capital investment, and that takes place in a city with a population of at least 600,000 – in other words, in Detroit. The city may designate only one such project, under the legislation.

“It’s always been my dream to once again see a vibrant downtown Detroit,” said Mike Ilitch, chairman of Ilitch Holdings, in the statement. “From the time we bought the Fox Theatre, I could envision a downtown where the streets were bustling and people were energized. It’s been a slow process at times, but we’re getting there now and a lot of great people are coming together to make it happen. It’s going to happen and I want to keep us moving toward that vision.”

“We have a tremendous opportunity through a large-scale project to make a positive impact on our community,” said Christopher Ilitch, president and CEO of Ilitch Holdings. “A project of this magnitude requires continued due diligence and a strategic partnership with the public sector. Working together we can ensure this opportunity connects Detroit’s existing set of initiatives and assets strengthening the downtown core and enhancing the image of our city, state and region.”

The proposal has already made progress in Lansing, where today in a 5-0 bipartisan vote, the Senate Government Operations Committee approved legislation to facilitate the development. Senate Majority Leader Randy Richardville said he expects the full Senate to pass the bill later today or Wednesday.

“We want to get it to … the governor ASAP,” said Richardville, R-Monroe. “This is really important, really exciting stuff about the city of Detroit.”

House Bill 5463 was initially intended to put downtown development authorities on an equal tax footing with economic development authorities, but recently was transformed into a vehicle to facilitate the Ilitch plans, said Rep. John Walsh, R-Livonia, the bill’s sponsor.

It allows a downtown development authority in a city with a population greater than 600,000 to capture taxes, including school taxes, to help finance certain development projects. For a “catalyst development,” such as the Ilitch proposal, the captured taxes could be used as security for construction bonds. The bill also provides for exemptions from property taxes and transfer taxes.

A Senate Fiscal Agency analysis said the bill “would reduce both state School Aid Fund revenue and local tax revenue by an unknown amount.”

Although no site has been chosen or at least announced yet, through years of land acquisition by the Ilitch organization and speculation by Ilitch watchers, at least three possible sites have been mentioned as potential locations for a new Ilitch-backed arena.

They are the area directly behind the Ilitch-owned Fox Theatre; an area opposite the Ilitch-owned MotorCity Casino bounded roughly by Grand River, Martin Luther King Jr. Boulevard, and the Lodge freeway; and an area of mostly vacant lots west of Woodward and just north of I-75. The Ilitch organization owns a considerable amount of land in the downtown area.

The Ilitch news media release said the site chosen “will be strategically located to serve some of the most underutilized areas in Detroit’s downtown core, strengthening the link between Detroit’s existing assets through a continuous, walkable environment connecting one district to the next and serving to improve the quality of life for residents and visitors alike.”

A spokeswoman for the Ilitch organization said there were no estimates of how many residential units, retail shops or office space would be involved. She described the release as the beginning of a process to “explore the viability” of such a project.

Generally a project of this size and scope would take at least one to two years to design and win approvals and permits, and another two years to build.

Mike Ilitch’s desire to build a new arena as the centerpiece of an entertainment district has long been one of the worst-kept secrets in Detroit.

As long ago as 1993, Ilitch was hiring top-ranked architectural firms to create master plans for the district around the Fox Theatre. Ilitch met in 1993 with top corporate executives in Detroit to explain his vision for an entertainment district centering on the Fox, according to a Free Press article at that time.